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UPDATE 8-Oil falls on supply growth, U.S. crude drops to 16-month low
September 10, 2014 / 12:15 PM / 3 years ago

UPDATE 8-Oil falls on supply growth, U.S. crude drops to 16-month low

* Brent down a fifth straight session to 17-month low

* U.S. crude stocks dip but refined products stocks up-EIA

* Saudi says cuts output, but overall OPEC supply rises (Updates prices to settlement, paragraphs 5-7)

By Robert Gibbons

NEW YORK, Sept 10 (Reuters) - U.S. crude futures fell to a 16-month low and Brent to a 17-month low on Wednesday on rising supply and tepid demand as OPEC lowered projected demand for its crude and data showed U.S. refined product stocks jumped.

U.S. futures fell two cents below its previous 2014 low from January after Wednesday’s report from the Energy Information Administration of a near 1 million barrel drop in U.S. crude stocks last week, a slightly smaller fall than expected.

Crude oil inventories at Cushing, Oklahoma, the delivery point for the U.S. crude oil contract traded on the New York Stock Exchange, rose by 77,000 barrels and gasoline and distillate stocks jumped by 2.4 million and 4.1 million barrels respectively.

“The report is very bearish given the large increases in refined product inventories, and even though the crude drawdown was close to expectations, it seemed to disappoint,” said John Kilduff, partner at Again Capital LLC in New York.

Brent crude for October delivery fell $1.12 to settle at $98.04 a barrel, off for a fifth straight session.

Brent fell to $97.60 intraday, the lowest price since April 18, 2013, when it hit $96.75. Brent prices are off by 15 percent since hitting a year high above $115 a barrel in June, with fast-rising U.S. output and the return of exports from Libya creating a market that looks increasingly over-supplied.

U.S. October crude fell $1.08 to settle at $91.67 a barrel, having dropped to $91.22, the lowest since May 2, 2013. Its discount to Brent CL-LCO1=R narrowed intraday to $6.19 a barrel, the lowest since mid-August.

Oil prices on both sides of the Atlantic have dropped over the past three months, dragged down by soaring U.S. shale oil production which has replaced many imports from West Africa, Europe and other regions.

Total production from members of the Organization of the Petroleum Exporting Countries rose last month despite Saudi Arabia saying it had cut output, according to the group’s monthly market report on Wednesday.

The OPEC report also cut the forecast for expected demand for crude from the group by 160,000 barrels per day (bpd) in both 2014 and 2015.

“The oil (price) horizon does not look rosy for oil producers,” said PVM Oil Associates Managing Director David Hufton.

The U.S. EIA said on Tuesday that U.S. output in August hit its highest level since 1986.

Libya’s oil output has recovered to more than 800,000 bpd despite political instability, the National Oil Corp said on Wednesday. Libya’s Prime Minister Abdallah Al-Thinni told Reuters it could hit 1 million bpd next month.

As prices have fallen due to higher production, traders and analysts have said that risks to supply from the Ukraine crisis and the difficult security situation in Iraq still remain. (Additional reporting by David Sheppard in London and Osamu Tsukimori in Tokyo; Editing by Susan Thomas, Pravin Char, James Dalgleish and Chris Reese)

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